going-the-extra-mile-300x60
  • flag-en
  • flag-ro
  • flag-bg

THE FORCE MAJEURE CLAUSE IN THE CONTEXT OF Covid-19 PANDEMIC

During this hard period we are experiencing at the global level, we are challenged in all aspects of our lives regarding health, discipline and even the organisation of near future in a way to adapt to our new needs in which the expenses for pleasure shall be almost eliminated and the useful and necessary expenses shall be the ones we shall focus upon. 

But what should we do when certain agreements have already been concluded before the outbreak of Covid-19 pandemic, which now, due to the negative effects upon the economy, the parties are put in a position of failure to observe the obligations borne by these agreements due to objective causes defined as force majeure, which prevents the performance of their contractual obligations.

It is well known that in the final part of most of the agreements the force majeure clause is stated, which is meant to be the safety net in case the obligations cannot be observed due to an “external, unpredictable, absolutely invincible and unavoidable event” [the Civil Code]. 

But is this really true? If indeed there is a force majeure clause in the agreement and “if the law does not provide otherwise or the parties do not agree otherwise, is the liability waived when the damage is caused by force majeure”?  [the Civil Code]

Let’s take a look at what we know an event of force majeure represents – generally, the force majeure refers to events which are not connected to the actions of men and which cannot be foreseen, as earthquakes, tsunamis, storms, heavy snow, therefore extraordinary natural events; but also extraordinary events caused by human as wars, riots and revolutions.

And yet the question stands – is the pandemic regarded as an event of force majeure? The Warning launched by CCIR (the Chamber of Commerce and Industry of Romania) in respect of the corona virus, states that:

“Some force majeure clauses may be provided to include epidemics or pandemics.  When a force majeure clause is provided to cover a more general area– even without including epidemics or pandemics, but nonetheless providing for any action or fact arising beyond the control or will of the affected parties, then the spreading of the epidemic or pandemic can be considered a force majeure event.  However, an insufficiently defined force majeure clause, which refers only to natural events or which states only the phrase <a force majeure event>, could be considered as insufficient for the exemption of liability.”

Therefore, the fact that a force majeure clause covers explicitly the situation of an epidemic or pandemic seems insufficient. The contracting party which invokes the impossibility to observe its obligations due to Covid-19 must prove this and furthermore it must prove that it tried, by any reasonable methods, to avoid or mitigate the consequences.

The jurisprudence of the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania in respect of similar situation provides that it is the decision of the damaged party to take or not into account the reasons and proofs, together with the notice of force majeure issued by CCIR, presented by the other contracting party with a view to justify the failure to observe its contractual obligations.  

We shall certainly be the witnesses of the creation of an extensive jurisprudence of the courts in respect of force majeure clauses in agreements, in the context of the Covid-19 pandemic. In fact the courts shall be the ones to have the last word and to bring improvement in the content of force majeure clauses, post-Covid-19.